Democrats try using debt bill to avoid default

WASHINGTON — President Obama and Senate Democrats tried Monday to break a political logjam that could threaten the U.S. economy, advancing legislation that would raise the federal debt ceiling as soon as possible.

Democrats said they will attempt to force Republicans to agree to a long-term, $1 trillion debt-limit increase to ensure that the government does not reach a point this month where it may be unable to pay its bills, risking its first default. They said that if necessary they also may accept a short-term bill, perhaps lasting only weeks, to avoid going over the brink.

Related Headlines

The Democratic push on the debt limit came as a partial government shutdown entered its second week with no solution in sight. New polling showed that the fiscal standoff is hurting Republicans far more than it is Obama, although no party is faring particularly well.

A Washington Post-ABC News survey found that 70 percent of Americans disapprove of the way Republicans are handling budget negotiations, up from 63 percent last week, with 24 percent approving.

Obama’s approval rating on budget matters ticked up slightly over the same time period — from 41 percent to 45 percent — but 51 percent disapprove. Obama’s Democratic colleagues in Congress are faring worse, with 61 percent of Americans disapproving, up from 56 percent before the shutdown.

In a hastily arranged visit Monday to the headquarters of the Federal Emergency Management Agency, Obama said he will not bow to Republicans’ demands that he enter negotiations with them or risk a continued shutdown or a default.

“I cannot do that under the threat that if Republicans don’t get 100 percent of their way, they’re going to either shut down the government or they are going to default on America’s debt,” he said.

Republicans remained undeterred, saying they would neither raise the $16.7 trillion debt ceiling nor reopen the government without first winning concessions.

Lawmakers have little time to resolve the impasse. After Oct. 17, the Treasury Department says it cannot guarantee that it can pay all of the government’s bills, and independent analysts say the government would have less than two weeks before a default.

Financial markets on Monday sounded alarms about the brinkmanship. The stock market fell, with the Standard & Poor’s 500 index down 14.38 points, to 1676.12. Volatility spiked. Short-term borrowing costs for U.S. taxpayers reached their highest point in nearly a year.

Later this week, Senate Majority Leader Harry Reid, D-Nev., hopes to open debate on a bill that would raise the debt, aides said. To do so, he would need the support of all 54 Senate Democrats and six Republicans — a goal that seemed possible Monday, but is far from assured.

Meanwhile, if any senator objects to the proposal, procedural hurdles would prevent the measure from clearing the Senate and reaching the House until Oct. 15 — two days before the Treasury Department’s deadline.

Several Republican senators left the door open to supporting a “clean” debt-limit bill, but said it would depend on whether Democrats were willing to enter talks on broader budget reforms.

“I don’t know what the dynamics are here. I don’t know what’s being offered. It’s too early,” said Sen. John McCain, Ariz., who nonetheless held out hope. “I’m going to have to wait and see.”

But senior Republican aides said any debt-limit proposal in the House is likely to need significant conservative sweeteners to be considered.

House Speaker John Boehner, R-Ohio, sharply criticized Democrats for not coming to the negotiating table.

“Now, the American people expect when their leaders have differences, and we’re in a time of crisis, we’ll sit down and at least have a conversation,” Boehner said on the House floor. “Really, Mr. President, it’s time to have that conversation before our economy is put further at risk.”

The difficulty of achieving an agreement was underscored Monday when Senate Republicans said they might try to amend legislation — which the House passed unanimously over the weekend — to retroactively pay federal workers who are furloughed by the shutdown.

Sen. John Cornyn of Texas, the second-ranking Senate Republican, suggested that he would be uncomfortable passing the legislation without first trying to add a series of piecemeal measures designed to lessen the effect of agency closures.

Senate Democrats said they still plan to hold an up-or-down vote on the retroactive pay measure later this week, and aides predicted it would still pass overwhelmingly.

“It passed 407 to nothing in the House? This ought to be the common-sense solution at least to make sure that the workforce is OK,” said Sen. Mark Warner, R-Va.

The pain of the shutdown was lessened in Washington over the weekend after the Pentagon announced that it was recalling nearly all of its furloughed employees. But the consequences of the closure were increasingly visible worldwide Monday.

In Bali, Indonesia, Obama missed a major Pacific trade summit, which he was scheduled to attend before the shutdown scuttled his plans. Secretary of State John Kerry, the president’s stand-in, was pushed to the rear corner of an iconic photo of heads of state, a visual reminder that the standstill was costing the nation an influential presence at the gathering.

“You can see the president is busy with the domestic situation of the United States,” said Russian President Vladimir Putin. “If I was in his situation, I would not come, either.”

Back in Washington, members of both parties continued to wage battle over both the shutdown and the debt-ceiling impasse.

Obama and Reid once again called on Boehner to simply hold a vote on a bill that would reopen the government.

“I ask the speaker: Why are you afraid?” Reid said. “Are you afraid the bill will pass, the government will reopen and Americans will realize you took the country hostage for no apparent reason?”

Meanwhile, in the House, Boehner held a lunch in his office for Republicans, but lawmakers who emerged from the meeting said the group had not decided how to move forward.

A meeting of the entire Republican conference is scheduled for 9 a.m. Tuesday, but aides said rank-and-file lawmakers — incensed by what they consider Obama’s refusal to recognize their constitutional role in the budget process — will be in no mood to compromise. “We’re just waiting for the phone to ring,” one senior aide said.

Senior White House officials said Obama believes that negotiating over the government shutdown or debt ceiling would have a harmful, long-term effect on governance, effectively allowing one group to hold the government hostage.

“He’s not going to sanction negotiations with any faction that are using the threat of default as a way of enacting policy in our democracy,” Gene Sperling, director of the National Economic Council, said at a discussion held by Politico. “The era of threatening default has to be over.”

The White House says it prefers a long-term debt-limit increase, but Sperling said the duration is up to Congress to decide. “I think longer is better for economic certainty and jobs, but it is ultimately up to them,” he said.

The Post-ABC poll was conducted Oct. 2 to 6 with a random national sample of 1,005 adults reached on conventional and cellular phones. The overall results have a margin of sampling error of plus or minus 3.5 percentage points.

Here at MaineToday Media we value our readers and are committed to growing our community by encouraging you to add to the discussion.

To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use. Click here to flag and report a comment that violates our terms of use.